Wanted: A Fix For Small Firms’ Labor Problem

South Korea has an unemployment rate (3.3%) that would be the envy of many western countries. It also has a well documented thirst for higher learning that results in fierce competition for top white collar jobs and a shortage of blue collar workers.

Associated Press

As a result, owners of some smaller manufacturing businesses have to scramble to secure the services of migrant workers from overseas to plug the labor shortage. Some have even taken to a Korean tradition of “camping out” to ensure they’re literally close to the head of the queue for new staff.

It’s a practice familiar to Korean parents who have spent a night sleeping on the sidewalk to ensure they’re among the first to apply for a spot in a good school for their child, or apartment hunters who’ve pitched up in an overnight queue for a sought-after residence.

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On a recent morning in the town of Paju near Seoul, Kwack Eun-young, the owner of a small metal welding company, learned to her cost that other small business owners were prepared to camp overnight at the local labor center to guarantee some of the limited supply of new workers.

“We were too late. When we got there, the quota was all gone,” Ms. Kwack said. The allocation of new workers finished within three hours.

Ms. Kwack’s company currently employs three Thai nationals, with two set to return to Thailand in a few months when their five-year non-extendable employment visas expire.

Ms. Kwack is a casualty of a cap on the number of foreign laborers coming to Korea, which was imposed with the intention of protecting jobs for Koreans. The quota varies from year to year based on the government’s assessment of demand and supply. This year’s cap of 40,000 is up from 28,100 last year and 13,000 in 2009.

Some small factory owners complain the quota is still too small to meet their needs. Others point out that the quota doesn’t guarantee jobs for Koreans anyway because many shun physically challenging work and the relatively modest pay on offer.

“It is obvious that these small and medium-size manufacturing companies are having difficulty finding workers. Though we understand the government’s position… there is an urgent need to raise the quota,” said Um Seung-youn, an official at the Korea Federation of Small and Medium Business.

For its part, the government says it doesn’t see a critical shortage of migrant laborers.

“The quota is determined… after thoroughly assessing economic conditions and demands from small and medium-sized enterprises,” said Kim Woo-hyung, an official at the Labor Ministry.